PART I. FINANCIAL INFORMATION This section provides the unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Mitek Systems' unaudited consolidated financial statements and detailed notes for the reporting periods [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, at specific points in time Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2020 | September 30, 2019 | Change ($) | Change (%) | | :-------------------------- | :------------- | :----------------- | :--------- | :--------- | | Total current assets | $55,447 | $54,130 | $1,317 | 2.4% | | Total assets | $147,978 | $135,897 | $12,081 | 8.9% | | Total current liabilities | $20,408 | $20,048 | $360 | 1.8% | | Total liabilities | $34,070 | $28,564 | $5,506 | 19.3% | | Total stockholders' equity | $113,908 | $107,333 | $6,575 | 6.1% | - Cash and cash equivalents increased slightly from **$16,748 thousand** at September 30, 2019, to **$16,928 thousand** at March 31, 2020[11](index=11&type=chunk) - Long-term investments saw a significant increase from **$1,552 thousand** to **$6,546 thousand**[11](index=11&type=chunk) [Consolidated Statements of Operations and Other Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income%20(Loss)) This statement details the company's revenues, expenses, and net income or loss over specific periods Consolidated Statements of Operations Highlights (Amounts in thousands, except per share data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Six Months Ended March 31, 2020 | Six Months Ended March 31, 2019 | | :---------------------- | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $23,192 | $19,983 | $45,259 | $37,666 | | Operating income (loss) | $1,064 | $(1,650) | $1,362 | $(6,210) | | Net income (loss) | $908 | $(716) | $1,468 | $(3,907) | | Net income (loss) per share—basic | $0.02 | $(0.02) | $0.04 | $(0.10) | | Net income (loss) per share—diluted | $0.02 | $(0.02) | $0.03 | $(0.10) | - Total revenue increased by **16%** for the three months ended March 31, 2020, and by **20%** for the six months ended March 31, 2020, compared to the respective prior periods[13](index=13&type=chunk) - The company reported a net income of **$908 thousand** for the three months ended March 31, 2020, a significant improvement from a net loss of **$716 thousand** in the prior year period[13](index=13&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts, including net income, stock-based compensation, and repurchases Stockholders' Equity Changes (Amounts in thousands) | Metric | March 31, 2020 (3 Months) | March 31, 2019 (3 Months) | March 31, 2020 (6 Months) | March 31, 2019 (6 Months) | | :----------------------------------- | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Balance, beginning of period | $111,524 | $95,568 | $107,333 | $95,394 | | Net income (loss) | $908 | $(716) | $1,468 | $(3,907) | | Stock-based compensation expense | $2,308 | $2,353 | $4,611 | $5,023 | | Repurchases and retirements of common stock | $(1,002) | — | $(1,002) | — | | Balance, end of period | $113,908 | $98,069 | $113,908 | $98,069 | - Total stockholders' equity increased to **$113,908 thousand** as of March 31, 2020, from **$107,333 thousand** at September 30, 2019[15](index=15&type=chunk)[18](index=18&type=chunk) - The company repurchased and retired **$1,002 thousand** of common stock during the six months ended March 31, 2020[15](index=15&type=chunk)[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities Consolidated Cash Flow Highlights (Amounts in thousands) | Activity | Six Months Ended March 31, 2020 | Six Months Ended March 31, 2019 | | :------------------------ | :------------------------------ | :------------------------------ | | Operating activities | $8,369 | $6,620 | | Investing activities | $(7,835) | $1,945 | | Financing activities | $(325) | $1,368 | | Net increase in cash | $180 | $9,717 | | Cash and cash equivalents at end of period | $16,928 | $18,745 | - Net cash provided by operating activities increased to **$8,369 thousand** for the six months ended March 31, 2020, from **$6,620 thousand** in the prior year[21](index=21&type=chunk) - Net cash used in investing activities was **$7,835 thousand**, primarily due to purchases of investments, a shift from net cash provided in the prior year[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Nature of Operations and Summary of Significant Accounting Policies](index=10&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the company's business, products, and key accounting principles applied in financial reporting - Mitek Systems, Inc. is a software development company specializing in mobile image capture and digital identity verification solutions, leveraging computer vision, AI, and machine learning[23](index=23&type=chunk) - Key products include Mobile Deposit® (over **3 billion** check deposits processed), Mobile Verify® (online identity verification with face comparison), MiSnap™ (image capture technology), and CheckReader™ (automated check data extraction)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - The company adopted ASC 842 (Leases) as of October 1, 2019, recognizing **$8.2 million** in lease liabilities and **$6.8 million** in right-of-use assets, with no material impact on income statements or cash flows[62](index=62&type=chunk) [2. Revenue Recognition](index=18&type=section&id=2.%20REVENUE%20RECOGNITION) This note details the company's policies and disaggregation of revenue from contracts with customers - Revenue is primarily generated from software and hardware sales (on-premise licenses, hardware scanners) and services and other (transactional SaaS, maintenance, professional services)[75](index=75&type=chunk)[76](index=76&type=chunk) Revenue Disaggregation by Product Category (Amounts in thousands) | Major Product Category | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Six Months Ended March 31, 2020 | Six Months Ended March 31, 2019 | | :------------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Deposits software and hardware | $10,317 | $9,215 | $20,600 | $18,265 | | Deposits services and other | $4,305 | $3,693 | $8,673 | $6,513 | | **Deposits revenue** | **$14,622** | **$12,908** | **$29,273** | **$24,778** | | Identity verification software and hardware | $1,136 | $1,370 | $2,368 | $2,315 | | Identity verification services and other | $7,434 | $5,705 | $13,618 | $10,573 | | **Identity verification revenue** | **$8,570** | **$7,075** | **$15,986** | **$12,888** | | **Total revenue** | **$23,192** | **$19,983** | **$45,259** | **$37,666** | - Contract assets (current and non-current) increased from **$2,931 thousand** at September 30, 2019, to **$6,502 thousand** at March 31, 2020, while deferred revenue (current and non-current) increased from **$6,348 thousand** to **$9,973 thousand**[83](index=83&type=chunk) [3. Restructuring](index=20&type=section&id=3.%20RESTRUCTURING) This note explains the details and financial impact of the company's strategic restructuring activities - The company undertook a strategic restructuring of A2iA's Paris operations in June 2019, ceasing sales of certain unprofitable and non-core products and reducing workforce[86](index=86&type=chunk) Restructuring Accrual Changes (Amounts in thousands) | Metric | Amount | | :----------------------------------- | :----- | | Balance at September 30, 2019 | $1,526 | | Accrual reversed | $(114) | | Payments | $(1,098)| | Foreign currency effect | $19 | | Balance at March 31, 2020 | $333 | [4. Investments](index=21&type=section&id=4.%20INVESTMENTS) This note provides information on the company's investment portfolio, including fair value and classification Investment Portfolio Fair Value (Amounts in thousands) | Security Type | March 31, 2020 Fair Value | September 30, 2019 Fair Value | | :---------------------------- | :------------------------ | :---------------------------- | | U.S. Treasury, short-term | $6,311 | $4,242 | | Asset-backed securities, short-term | $1,659 | — | | Corporate debt securities, short-term | $6,170 | $12,260 | | Commercial paper, short-term | $4,878 | $8,386 | | U.S. Treasury, long-term | $1,023 | $1,101 | | Asset-backed securities, long-term | $3,080 | — | | Corporate debt securities, long-term | $2,443 | $451 | | **Total Investments** | **$25,564** | **$18,054** | - All investments are classified as available-for-sale debt securities, carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive loss[89](index=89&type=chunk)[90](index=90&type=chunk) - The company uses a fair value hierarchy (Level 1, 2, 3) for its investments and acquisition-related contingent consideration[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Acquisition-related contingent consideration is valued using Level 3 unobservable inputs[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) [5. Goodwill and Intangible Assets](index=24&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note details the balances and amortization of goodwill and other acquired intangible assets - Goodwill balance increased to **$33,554 thousand** at March 31, 2020, from **$32,636 thousand** at September 30, 2019, primarily due to other adjustments and foreign currency effects[95](index=95&type=chunk) Intangible Assets, Net (Amounts in thousands) | Intangible Asset | March 31, 2020 Net | September 30, 2019 Net | | :---------------------- | :----------------- | :--------------------- | | Completed technologies | $11,768 | $13,237 | | Customer relationships | $9,394 | $10,927 | | Trade names | $173 | $241 | | **Total intangible assets** | **$21,335** | **$24,405** | - Amortization expense for acquired intangible assets was **$3.2 million** for the six months ended March 31, 2020, a decrease from **$3.5 million** in the prior year, due to certain assets becoming fully amortized[96](index=96&type=chunk) [6. Stockholders' Equity](index=25&type=section&id=6.%20STOCKHOLDERS'%20EQUITY) This note describes the components of stockholders' equity, including stock-based compensation and share repurchase programs Stock-Based Compensation Expense (Amounts in thousands) | Expense Category | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Six Months Ended March 31, 2020 | Six Months Ended March 31, 2019 | | :------------------------ | :-------------------------------- | :-------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenue | $65 | $56 | $126 | $100 | | Selling and marketing | $703 | $746 | $1,371 | $1,537 | | Research and development | $571 | $567 | $1,149 | $1,001 | | General and administrative| $969 | $984 | $1,965 | $2,385 | | **Total** | **$2,308** | **$2,353** | **$4,611** | **$5,023** | - The company adopted the 2020 Incentive Plan, reserving **4.5 million** shares plus certain shares from prior plans, and had **3,815,819** shares available for future grants as of March 31, 2020[101](index=101&type=chunk) - A share repurchase program for up to **$10 million** was authorized in December 2019, with **$1.0 million** (**137,000** shares) repurchased by March 31, 2020[112](index=112&type=chunk)[113](index=113&type=chunk) [7. Income Taxes](index=30&type=section&id=7.%20INCOME%20TAXES) This note presents the company's income tax provisions, effective tax rates, and deferred tax assets and liabilities Income Tax Benefit (Provision) and Effective Tax Rate (Amounts in thousands) | Metric | Six Months Ended March 31, 2020 | Six Months Ended March 31, 2019 | | :-------------------------- | :------------------------------ | :------------------------------ | | Income tax benefit (provision) | $(229) | $2,149 | | Effective tax rate | 13% | 35% | - The effective tax rate for the six months ended March 31, 2020, was **13%**, compared to **35%** in the prior year, primarily due to excess tax benefits from stock options/RSUs, foreign/state taxes, and R&D credits[120](index=120&type=chunk) [8. Commitments and Contingencies](index=30&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's contractual obligations, lease commitments, and ongoing legal proceedings - Operating ROU assets were **$6.0 million** and total operating lease liabilities were **$7.5 million** as of March 31, 2020, with a weighted-average remaining lease term of **4.7 years**[123](index=123&type=chunk) - The company is involved in legal proceedings, including a claim against ICAR for **€0.8 million**, third-party patent infringement claims against its customers (e.g., USAA vs. Wells Fargo), and a lawsuit against UrbanFT for delinquent payments and patent non-infringement[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[134](index=134&type=chunk) - A **$10.0 million** secured revolving credit facility with Silicon Valley Bank was in place, with no outstanding borrowings as of March 31, 2020[136](index=136&type=chunk) [9. Revenue Concentration](index=33&type=section&id=9.%20REVENUE%20CONCENTRATION) This note identifies significant customer and geographic concentrations in the company's revenue streams - For the three months ended March 31, 2020, two customers accounted for **$6.6 million** (**14%**) of total revenue[137](index=137&type=chunk) - For the six months, two customers accounted for **$11.8 million** (**16%** and **11%** respectively)[137](index=137&type=chunk) - International sales represented approximately **25%** of total revenue for both the three and six months ended March 31, 2020, a decrease from **35%** in the prior year periods[141](index=141&type=chunk) - The company believes it is not dependent on any single channel partner, as the loss of one would not materially affect operations due to the ability to sell products to end-users through other channels[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, market opportunities, challenges, and liquidity for the reporting periods [Overview](index=36&type=section&id=Overview) This section provides a high-level summary of the company's business, core solutions, and market position - Mitek is a leading innovator in mobile image capture and digital identity verification, serving over **7,000** financial services organizations and fintech brands globally[146](index=146&type=chunk) - The company's core solutions, Mobile Deposit® and Mobile Verify®, leverage computer vision, AI, and machine learning to enhance user experience, detect fraud, and ensure compliant transactions[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk) [Second Quarter Fiscal 2020 Highlights](index=37&type=section&id=Second%20Quarter%20Fiscal%202020%20Highlights) This section summarizes key financial and operational achievements for the second fiscal quarter of 2020 Q2 Fiscal 2020 Financial Highlights (Amounts in millions, except per share data) | Metric | Q2 FY2020 | Q2 FY2019 | | :----------------------------------- | :-------- | :-------- | | Revenue | $23.2 | $20.0 | | Net income (loss) | $0.9 | $(0.7) | | Net income (loss) per diluted share | $0.02 | $(0.02) | - Cash provided by operating activities increased to **$8.4 million** for the six months ended March 31, 2020, up from **$6.6 million** in the prior year[158](index=158&type=chunk) - The company expanded its patent portfolio to **63** issued patents and has **19** additional patent applications pending as of March 31, 2020[158](index=158&type=chunk) [Restructuring](index=37&type=section&id=Restructuring) This section discusses the strategic restructuring undertaken to streamline operations and focus resources - A strategic restructuring of A2iA's Paris operations was undertaken in June 2019 to streamline the organization and focus resources, involving ceasing sales of certain non-core and unprofitable products and a workforce reduction[153](index=153&type=chunk) [Market Opportunities, Challenges & Risks](index=37&type=section&id=Market%20Opportunities,%20Challenges%20%26%20Risks) This section outlines the company's growth drivers, competitive landscape, and potential business risks - The company anticipates growth in deposits and identity verification products driven by digital transformation, increasing consumer demand for online trust and convenience, and stricter regulatory requirements[154](index=154&type=chunk) - Key challenges include competition, potential declines in demand for digital transactions, lengthy sales and implementation cycles, and product concentration making the company vulnerable to market shifts[155](index=155&type=chunk)[156](index=156&type=chunk) - The COVID-19 pandemic has created global business disruptions, transitioning the workforce to remote operations and potentially impacting revenues, though it may also accelerate digital technology adoption[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance over the reporting periods [Comparison of the Three Months Ended March 31, 2020 and 2019](index=38&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202020%20and%202019) This section compares the company's financial results for the three-month periods ended March 31, 2020 and 2019 Q2 Financial Performance (Amounts in thousands, except percentages) | Metric | 2020 ($) | 2019 ($) | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Total revenue | 23,192 | 19,983 | 3,209 | 16% | | Software and hardware revenue | 11,453 | 10,585 | 868 | 8% | | Services and other revenue | 11,739 | 9,398 | 2,341 | 25% | | Cost of revenue | 3,186 | 2,991 | 195 | 7% | | Selling and marketing expenses | 7,448 | 6,752 | 696 | 10% | | Research and development expenses | 4,819 | 5,290 | (471) | (9)% | | General and administrative expenses | 5,210 | 4,827 | 383 | 8% | | Acquisition-related costs and expenses | 1,579 | 1,773 | (194) | (11)% | | Restructuring costs | (114) | — | (114) | (100)% | | Net income (loss) | 908 | (716) | 1,624 | 227% | - Services and other revenue, driven by Mobile Verify® transactional SaaS, saw a **25%** increase, contributing significantly to overall revenue growth[166](index=166&type=chunk) - Research and development expenses decreased by **9%** due to lower costs resulting from the June 2019 restructuring plan[169](index=169&type=chunk) [Comparison of the Six Months Ended March 31, 2020 and 2019](index=41&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20March%2031,%202020%20and%202019) This section compares the company's financial results for the six-month periods ended March 31, 2020 and 2019 Six-Month Financial Performance (Amounts in thousands, except percentages) | Metric | 2020 ($) | 2019 ($) | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Total revenue | 45,259 | 37,666 | 7,593 | 20% | | Software and hardware revenue | 22,968 | 20,580 | 2,388 | 12% | | Services and other revenue | 22,291 | 17,086 | 5,205 | 30% | | Cost of revenue | 6,119 | 5,869 | 250 | 4% | | Selling and marketing expenses | 14,778 | 13,960 | 818 | 6% | | Research and development expenses | 9,429 | 9,778 | (349) | (4)% | | General and administrative expenses | 10,498 | 10,669 | (171) | (2)% | | Acquisition-related costs and expenses | 3,187 | 3,600 | (413) | (11)% | | Restructuring costs | (114) | — | (114) | (100)% | | Net income (loss) | 1,468 | (3,907) | 5,375 | 138% | - Total revenue increased by **20%** to **$45.3 million**, driven by a **30%** growth in services and other revenue, particularly from Mobile Verify® transactional SaaS[176](index=176&type=chunk) - Net income for the six months ended March 31, 2020, was **$1.5 million**, a significant improvement from a net loss of **$3.9 million** in the prior year[175](index=175&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to generate and manage cash, including its financial resources and obligations - Cash and cash equivalents and investments increased by **$7.7 million** (**22%**) to **$42.5 million** at March 31, 2020, from **$34.8 million** at September 30, 2019[187](index=187&type=chunk) - Net cash provided by operating activities was **$8.4 million**, while net cash used in investing activities was **$7.8 million**, primarily due to investment purchases[188](index=188&type=chunk)[190](index=190&type=chunk) - The company had **$19.0 million** in current available-for-sale securities and **$6.5 million** in long-term available-for-sale securities as of March 31, 2020[201](index=201&type=chunk) [Off Balance Sheet Arrangements](index=46&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements - The company had no off-balance sheet arrangements as of March 31, 2020[203](index=203&type=chunk) [Changes in Critical Accounting Policies](index=47&type=section&id=Changes%20in%20Critical%20Accounting%20Policies) This section discusses significant changes in the company's accounting policies and their financial impact - The primary change in critical accounting policies was the adoption of ASU 2016-02, Leases (Topic 842), effective October 1, 2019, which materially impacted the consolidated balance sheet by recognizing ROU assets and lease liabilities[204](index=204&type=chunk)[205](index=205&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section describes the company's exposure to market risks, including interest rate and foreign currency fluctuations [Interest Rates](index=47&type=section&id=Interest%20Rates) This section details the company's exposure to interest rate risk and its management of the investment portfolio - The company's investment portfolio, primarily cash equivalents and marketable debt securities, aims to preserve principal and maximize yields without significant risk, with no use of derivative financial instruments[206](index=206&type=chunk) - A hypothetical **100 basis point** change in market interest rates would not materially impact the fair value of the investment portfolio due to the relatively short maturities of these investments[207](index=207&type=chunk) [Foreign Currency Risk](index=47&type=section&id=Foreign%20Currency%20Risk) This section explains the company's exposure to foreign currency exchange rate fluctuations from international operations - Operations in France, the Netherlands, and Spain expose the company to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the Euro[208](index=208&type=chunk) - Translation adjustments from converting functional currency financial statements into U.S. dollars are reported in the consolidated statements of operations and other comprehensive income (loss)[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting [Disclosure Controls and Procedures](index=48&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's controls for timely and accurate financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2020, providing reasonable assurance for timely and accurate financial reporting[210](index=210&type=chunk) [Changes in Internal Control over Financial Reporting](index=48&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting - There were no material changes in internal control over financial reporting during the quarter ended March 31, 2020[211](index=211&type=chunk) - Despite most employees working remotely due to COVID-19, the company has not experienced any material impact on its internal controls and continues to monitor the situation[211](index=211&type=chunk) PART II. OTHER INFORMATION This section includes additional information not covered in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) This section details legal proceedings referenced in the financial statement notes, confirming no material impact from ordinary course matters - Information regarding legal proceedings is detailed in Note **8** to the consolidated financial statements[214](index=214&type=chunk) - The company believes that the disposition of various claims and legal proceedings arising in the ordinary course of business will not have a material effect on its financial condition or results of operations[214](index=214&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section highlights key risk factors, including the potential adverse impacts of the COVID-19 pandemic on business operations and financial results - The COVID-19 pandemic is expected to directly and/or indirectly impact the company's business, operations, and financial results, with the full extent being uncertain and difficult to predict[216](index=216&type=chunk) - Governmental measures (e.g., stay-at-home orders, travel restrictions) and remote work transitions may delay sales, harm productivity, and negatively affect customer contracts and revenues[217](index=217&type=chunk) - The pandemic could disrupt global financial markets, reduce access to capital, and negatively affect liquidity and stock market stability, potentially leading to a recession or market correction[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no previously undisclosed unregistered sales of equity securities occurred during the quarter ended March 31, 2020 - No unregistered sales of the company's equity securities occurred during the quarter ended March 31, 2020, that were not previously disclosed[219](index=219&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[220](index=220&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms the absence of any mine safety disclosures - There are no mine safety disclosures[222](index=222&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) This section reports on any other material information not covered elsewhere in the report - There is no other information to report[223](index=223&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, corporate documents, and certifications - The exhibits include Share Purchase Agreements, Restated Certificate of Incorporation, Bylaws, Certificate of Designation of Series B Junior Participating Preferred Stock, and certifications from the CEO and CFO[224](index=224&type=chunk) [Signatures](index=53&type=section&id=Signatures) This section contains the duly authorized signatures of the CEO and CFO, affirming the submission of the report - The report is signed by Scipio Maximus Carnecchia, Chief Executive Officer, and Jeffrey C. Davison, Chief Financial Officer, on May 7, 2020[228](index=228&type=chunk)[229](index=229&type=chunk)

Investor presentation : MITK Q2 FY20 © 2020 Mitek Systems Inc. 1 ● ● Safe harbor statement ● ● Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earni ...

Mitek Systems, Inc. (NASDAQ:MITK) Q2 2020 Results Conference Call April 30, 2020 4:30 PM ET Company Participants Todd Kehrli - IR, MKR Group, Inc. Max Carnecchia - CEO Jeff Davison - CFO Conference Call Participants Mike Grondahl - Northland Securities Bhavan Suri - William Blair Allen Klee - National Securities Corporation Darren Aftahi - Roth Capital Partners Operator Good day and welcome to the Mitek Systems Second Quarter Fiscal 2020 Financial Results Conference Call. Today's conference is being recorde ...

For the transition period from to . Commission File Number 001-35231 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2019 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 MITEK SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 87-0418827 (State or other jurisdiction of incorpor ...

Financial Data and Key Metrics Changes - Mitek reported record Q1 revenue of $22.1 million, representing a 25% year-over-year growth [9][30] - Non-GAAP net income increased to $5 million or $0.12 per diluted share, up 377% year-over-year [9][37] - Cash flow from operations was $5.2 million, with total cash and investments reaching $39.9 million [9][38] Business Line Data and Key Metrics Changes - Deposits revenue increased by 23% to $14.7 million, while identity verification revenue grew by 28% to $7.4 million [32][30] - Transactional SaaS revenue grew 39% year-over-year to $6.1 million [31][30] - Software and hardware revenue was $11.5 million, an increase of 15% year-over-year [30] Market Data and Key Metrics Changes - The identity verification solutions saw a 39% growth in transactional SaaS revenue and transactions [18] - Over 6,500 financial institutions are using Mitek's deposit products, indicating strong market penetration [25] Company Strategy and Development Direction - Mitek is focused on expanding partnerships in the identity verification market, particularly in financial services and the gig economy [9][24] - The company aims to innovate and deliver the most accurate identity verification solutions, with ongoing investments in technology [24] - Mitek is positioned to leverage its unique offerings and market leadership to drive future growth [9][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing momentum in the identity verification market and the potential for further growth [9][28] - The company reiterated its full-year revenue guidance of $98 million to $102 million, representing a growth of approximately 16% to 21% year-over-year [39] Other Important Information - Mitek is involved in ongoing patent litigation, which could impact its operations and market perception [10][16] - The company is actively defending its technology and patents, which it believes are essential for maintaining its competitive edge [16][54] Q&A Session Summary Question: Impact of U.S. bank promotions on new business - Management noted that many banks are running programs to drive check traffic to mobile channels, but there is no direct cause and effect observed in quarterly results [44][45] Question: Changes in competitive dynamics post-rulings - Management indicated no change in competitive dynamics and emphasized their commitment to protecting their technology and patents [50][54] Question: Initial contract sizes and follow-on growth rates - Management explained that initial contracts vary by institution and typically start small, with gradual growth as implementations progress [56][60] Question: Impact of jury awards on mobile deposit offerings - Management confirmed that the jury awards do not affect the continued use of their mobile deposit offerings [63] Question: Guidance for the year despite strong Q1 performance - Management stated that it is early in the year, and they prefer to maintain conservative guidance despite a strong quarter [66] Question: Update on buyback program - Management confirmed that the buyback program was announced just before entering a blackout period, and any activity will be reported in quarterly filings [67] Question: Clarification on patent legal actions - Management clarified that the declaratory judgment action is aimed at providing clarity regarding their patents without seeking damages [69] Question: Profitability expectations for the identity segment - Management anticipates the identity segment could turn profitable by the end of 2021, with gradual improvements in gross margins over time [72]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 001-35231 MITEK SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 87-0418827 (State or other jurisdiction of incorporati ...

Investor presentation : MITK Q4 FY19 © 2019 Mitek Systems Inc. 1 ● ● Safe harbor statement ● ● Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or expectations for earni ...

Mitek Systems, Inc. (NASDAQ:MITK) Q4 2019 Earnings Conference Call November 7, 2019 4:30 PM ET Company Participants Todd Kehrli - Investor Relations, MKR Group, Inc. Max Carnecchia - Chief Executive Officer Jeff Davison - Chief Financial Officer Conference Call Participants Bhavan Suri - William Blair & Company Operator Good day and welcome to the Mitek Systems Fourth Quarter and Fiscal 2019 Financial Results Conference Call. Today???s conference is being recorded. At this time, I would like to turn the con ...

PART I. FINANCIAL INFORMATION This part presents the company's unaudited financial statements, management's analysis, and disclosures on market risk and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents the unaudited consolidated financial statements for the period ended June 30, 2019, and accompanying notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20at%20June%2030%2C%202019%20(Unaudited)%20and%20September%2030%2C%202018) This section details the company's assets, liabilities, and stockholders' equity at the end of the reporting periods Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | June 30, 2019 (Unaudited) | September 30, 2018 | | :-------------------------- | :------------------------ | :------------------- | | Total assets | $135,870 | $127,150 | | Total liabilities | $32,546 | $31,756 | | Total stockholders' equity | $103,324 | $95,394 | | Cash and cash equivalents | $16,092 | $9,028 | | Short-term investments | $11,892 | $8,448 | | Accounts receivable, net | $14,566 | $16,821 | | Total current assets | $47,481 | $37,628 | | Total current liabilities | $21,994 | $20,407 | [Consolidated Statements of Operations and Other Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income%20(Loss)%20(Unaudited)%20for%20the%20Three%20and%20Nine%20Months%20Ended%20June%2030%2C%202019%20and%202018) This section presents the company's revenues, expenses, and net loss for the reported three and nine-month periods Consolidated Statements of Operations Highlights (Amounts in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $21,906 | $16,109 | $59,572 | $42,522 | | Operating loss | $(2,909) | $(2,863) | $(9,119) | $(6,440) | | Net loss | $(99) | $(2,784) | $(4,006) | $(9,680) | | Net loss per share—basic and diluted | $(0.00) | $(0.08) | $(0.10) | $(0.28) | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Unaudited)%20for%20the%20Three%20and%20Nine%20Months%20Ended%20June%2030%2C%202019%20and%202018) This section outlines the changes in the company's equity accounts during the reported periods Consolidated Stockholders' Equity Highlights (Amounts in thousands) | Metric | June 30, 2019 | September 30, 2018 | | :-------------------------- | :------------ | :----------------- | | Common Stock | $40 | $38 | | Additional paid-in capital | $129,145 | $116,944 | | Accumulated deficit | $(24,088) | $(21,002) | | Total stockholders' equity | $103,324 | $95,394 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20for%20the%20Nine%20Months%20Ended%20June%2030%2C%202019%20and%202018) This section details the cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flow Highlights (Amounts in thousands) | Metric | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $7,888 | $4,372 | | Net cash used in investing activities | $(4,320) | $(8,242) | | Net cash provided by financing activities | $3,632 | $246 | | Net increase (decrease) in cash and cash equivalents | $7,064 | $(3,655) | | Cash and cash equivalents at end of period | $16,092 | $8,634 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed disclosures and explanations of the company's significant accounting policies and financial statement items [1. Nature of Operations and Summary of Significant Accounting Policies](index=11&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the company's business, basis of presentation, and key accounting policies - Mitek Systems, Inc is a software development company specializing in mobile capture and digital identity verification solutions, leveraging artificial intelligence and machine learning[25](index=25&type=chunk) - Key products include Mobile Deposit®, Mobile Verify®, MiSnap™, Mobile Fill®, CheckReader™, and ID_CLOUD™[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - The company markets its products worldwide through direct sales and channel partners, holding **51 patents** and **19 pending patent applications** as of June 30, 2019[33](index=33&type=chunk)[34](index=34&type=chunk) - The company adopted ASC 606 on October 1, 2018, using the modified retrospective method, resulting in a **$920 thousand** adjustment to accumulated deficit[67](index=67&type=chunk)[73](index=73&type=chunk) [2. Revenue Recognition](index=21&type=section&id=2.%20REVENUE%20RECOGNITION) This note details the company's revenue recognition policies and disaggregates revenue by product category - Revenue is disaggregated into 'Deposits' and 'Identity verification' categories, further broken down by software/hardware and services/other[91](index=91&type=chunk) Disaggregated Revenue by Major Product Category (Amounts in thousands) | Major Product Category | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Deposits software and hardware | $10,521 | $8,498 | $28,786 | $20,379 | | Deposits services and other | $4,528 | $2,171 | $11,041 | $6,002 | | **Deposits revenue** | **$15,049** | **$10,669** | **$39,827** | **$26,381** | | Identity verification software and hardware | $1,367 | $1,960 | $3,682 | $6,058 | | Identity verification services and other | $5,490 | $3,480 | $16,063 | $10,083 | | **Identity verification revenue** | **$6,857** | **$5,440** | **$19,745** | **$16,141** | | **Total revenue** | **$21,906** | **$16,109** | **$59,572** | **$42,522** | - Contract assets increased to **$2.11 million** and contract liabilities increased to **$6.998 million** at June 30, 2019[92](index=92&type=chunk) - Capitalized sales commissions increased from **$1.0 million** to **$1.6 million** at June 30, 2019, with **$0.4 million** amortized during the nine-month period[93](index=93&type=chunk)[94](index=94&type=chunk) [3. Business Combinations](index=23&type=section&id=3.%20BUSINESS%20COMBINATIONS) This note provides details on the acquisitions of A2iA Group II, S.A.S. and ICAR Vision Systems, S.L - On May 23, 2018, Mitek acquired A2iA for **$26.8 million** cash and **2,514,588 shares** of common stock to extend its leadership in mobile deposit and identity verification[95](index=95&type=chunk)[96](index=96&type=chunk) - On October 16, 2017, Mitek acquired ICAR for **$3.0 million** cash and **584,291 shares** of common stock, with up to **$5.3 million** in potential earnouts[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) Estimated Fair Values of Acquired Assets and Liabilities (Amounts in thousands) | Metric | A2iA | ICAR | Total | | :-------------------------- | :----- | :----- | :------ | | Current assets | $3,929 | $2,036 | $5,965 | | Property, plant, and equipment | $307 | $83 | $390 | | Intangible assets | $28,610| $6,407 | $35,017 | | Goodwill | $24,991| $6,936 | $31,927 | | Other non-current assets | $1,177 | $87 | $1,264 | | Current liabilities | $(2,688)| $(1,652)| $(4,340) | | Deferred income tax liabilities | $(7,503)| $(1,602)| $(9,105) | | Other non-current liabilities | $(7) | $(828) | $(835) | | **Net assets acquired** | **$48,816**| **$11,467**| **$60,283**| Estimated Fair Values and Useful Lives of Intangible Assets Acquired (Amounts in thousands, except for years) | Intangible Asset | Amortization Period | Amount Assigned (A2iA) | Amount Assigned (ICAR) | | :----------------------- | :------------------ | :--------------------- | :--------------------- | | Completed technologies | 5.0 - 7.0 years | $13,015 | $4,956 | | Customer relationships | 2.0 - 5.0 years | $15,360 | $1,298 | | Trade names | 3.0 - 5.0 years | $235 | $153 | | **Total** | | **$28,610** | **$6,407** | [4. Restructuring](index=26&type=section&id=4.%20RESTRUCTURING) This note describes the strategic restructuring of A2iA's Paris operations - In June 2019, Mitek initiated a restructuring of A2iA's Paris operations, incurring **$3.2 million** in costs to streamline the organization[110](index=110&type=chunk) [5. Investments](index=27&type=section&id=5.%20INVESTMENTS) This note details the company's available-for-sale securities and fair value measurements Available-for-Sale Securities (Amounts in thousands) | Security Type | June 30, 2019 Fair Market Value | September 30, 2018 Fair Market Value | | :-------------------------- | :------------------------------ | :--------------------------------- | | U.S. Treasury, short-term | $4,228 | $3,683 | | Corporate debt securities, short-term | $7,664 | $4,765 | | **Total** | **$11,892** | **$8,448** | - All investments are classified as available-for-sale debt securities with maturities of less than one year[112](index=112&type=chunk) Fair Value Hierarchy of Investments and Contingent Consideration (Amounts in thousands) | Category | June 30, 2019 Balance | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :-------------------- | :------ | :------ | :------ | | **Assets:** | | | | | | Short-term investments | $11,892 | $4,228 | $7,664 | $— | | **Liabilities:** | | | | | | Acquisition-related contingent consideration | $1,180 | $— | $— | $1,180 | - Acquisition-related contingent consideration (Level 3) decreased from **$3.051 million** to **$1.180 million** due to payments of **$1.818 million**[115](index=115&type=chunk) [6. Goodwill and Intangible Assets](index=29&type=section&id=6.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note outlines the changes in goodwill and the composition of intangible assets - Goodwill balance decreased from **$34.407 million** to **$33.925 million** at June 30, 2019, primarily due to foreign currency effects[116](index=116&type=chunk) Intangible Assets, Net (Amounts in thousands) | Intangible Asset | June 30, 2019 Net | September 30, 2018 Net | | :----------------------- | :---------------- | :--------------------- | | Completed technologies | $14,580 | $17,271 | | Customer relationships | $12,214 | $15,277 | | Trade names | $286 | $399 | | **Total intangible assets**| **$27,080** | **$32,947** | - Amortization expense for acquired intangible assets was **$1.8 million** for Q3 2019 and **$5.3 million** for YTD Q3 2019[117](index=117&type=chunk) Estimated Future Amortization Expense for Intangible Assets (Amounts in thousands) | Fiscal Year | Estimated Future Amortization Expense | | :---------- | :------------------------------------ | | 2019 (remaining) | $1,775 | | 2020 | $6,486 | | 2021 | $6,216 | | 2022 | $5,815 | | 2023 | $3,816 | | 2024 | $1,806 | | Thereafter | $1,166 | | **Total** | **$27,080** | [7. Stockholders' Equity](index=30&type=section&id=7.%20STOCKHOLDERS'%20EQUITY) This note provides details on stock-based compensation, equity plans, and the Rights Agreement Stock-Based Compensation Expense (Amounts in thousands) | Category | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Nine Months Ended June 30, 2019 | Nine Months Ended June 30, 2018 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenue | $55 | $25 | $155 | $54 | | Selling and marketing | $705 | $596 | $2,242 | $1,977 | | Research and development | $437 | $482 | $1,438 | $1,298 | | General and administrative | $1,071 | $877 | $3,456 | $2,598 | | **Total stock-based compensation expense** | **$2,268** | **$1,980** | **$7,291** | **$5,927** | - As of June 30, 2019, the company had **$18.8 million** of unrecognized compensation expense related to stock awards, expected to be recognized over approximately **2.5 years**[120](index=120&type=chunk) - The 2012 Incentive Plan had various stock options and RSUs outstanding, with **757,135 shares** reserved for future grants[121](index=121&type=chunk) - The Employee Stock Purchase Plan (ESPP) had **871,658 shares** reserved for future purchases as of June 30, 2019[122](index=122&type=chunk)[123](index=123&type=chunk) - A Rights Agreement was adopted to protect net operating loss carryforwards by deterring stock accumulations of more than **4.9%**[133](index=133&type=chunk)[137](index=137&type=chunk) [8. Income Taxes](index=33&type=section&id=8.%20INCOME%20TAXES) This note explains the components of the company's income tax benefit and effective tax rate - For the nine months ended June 30, 2019, the company recorded an income tax benefit of **$4.9 million**, resulting in an effective tax rate of **55%**[139](index=139&type=chunk)[140](index=140&type=chunk) - The effective tax rate for the current fiscal year was a blended rate of **22.5%** due to transitional tax rate rules[140](index=140&type=chunk) [9. Commitments and Contingencies](index=33&type=section&id=9.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses legal proceedings, indemnification requests, and credit facilities - ICAR is facing a claim of **€0.8 million** (or **$0.9 million**) for an alleged breach of a services agreement[141](index=141&type=chunk)[142](index=142&type=chunk) - Mitek has received indemnification requests related to patent infringement lawsuits filed by Lupercal, LLC against its customers[143](index=143&type=chunk) - The company is monitoring patent infringement lawsuits filed by USAA against Wells Fargo due to potential industry impact[144](index=144&type=chunk)[145](index=145&type=chunk) - Mitek incurred **$0.3 million** in legal fees for third-party claims against customers during the nine months ended June 30, 2019[146](index=146&type=chunk) - The company has a **$10.0 million** secured revolving credit facility with Silicon Valley Bank, with no borrowings outstanding[149](index=149&type=chunk)[205](index=205&type=chunk) [10. Revenue and Vendor Concentrations](index=34&type=section&id=10.%20REVENUE%20AND%20VENDOR%20CONCENTRATIONS) This note discusses significant customer revenue concentrations and international sales - For the nine months ended June 30, 2019, one customer accounted for **18%** of total revenue[150](index=150&type=chunk) - International sales constituted approximately **33%** of total revenue for the nine months ended June 30, 2019, up from **25%** in the prior year[154](index=154&type=chunk) - The company does not believe it is substantially dependent on any single channel partner or vendor[153](index=153&type=chunk)[155](index=155&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=36&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides management's perspective on the company's financial performance, condition, and operational results [Overview](index=36&type=section&id=Overview) This section provides a high-level summary of the company's business and key product offerings - Mitek is a leading innovator in mobile capture and digital identity verification, serving over **6,600** financial services and fintech organizations globally[160](index=160&type=chunk) - Key products include Mobile Deposit®, Mobile Verify®, MiSnap™, Mobile Fill®, CheckReader™, and ID_CLOUD™[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Third Quarter Fiscal 2019 Highlights](index=37&type=section&id=Third%20Quarter%20Fiscal%202019%20Highlights) This section summarizes the key financial and operational achievements for the third quarter of fiscal 2019 - Revenue for the three months ended June 30, 2019, increased **36%** to **$21.9 million**, compared to $16.1 million in the prior year[171](index=171&type=chunk) - Net loss was **$0.1 million** ($0.00 per share) for the three months ended June 30, 2019, significantly reduced from $2.8 million ($0.08 per share) in the prior year[171](index=171&type=chunk) - Cash provided by operating activities for the nine months ended June 30, 2019, was **$7.9 million**, up from $4.4 million in the prior year[171](index=171&type=chunk) - The company added new patents, bringing the total to **51 issued patents** and **19 pending applications** as of June 30, 2019[171](index=171&type=chunk) [Restructuring](index=38&type=section&id=Restructuring) This section discusses the strategic restructuring of the acquired A2iA operations - Following the A2iA acquisition, Mitek initiated a strategic restructuring of A2iA's Paris operations in June 2019 to streamline operations and reallocate resources[172](index=172&type=chunk) [Market Opportunities, Challenges & Risks](index=38&type=section&id=Market%20Opportunities%2C%20Challenges%20&%20Risks) This section analyzes the market landscape, including growth drivers and potential headwinds - The company sees accelerated demand for digital identity verification driven by the growth of digital transactions and onboarding[173](index=173&type=chunk)[174](index=174&type=chunk) - Mobile check deposit is a mainstream capability, and the company plans to leverage its solution to increase adoption of its identification products[175](index=175&type=chunk)[176](index=176&type=chunk) - Challenges include declining check usage, competition from alternative payment technologies, and product concentration risk[177](index=177&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of operational results for the three and nine months ended June 30, 2019 and 2018 [Comparison of the Three Months Ended June 30, 2019 and 2018](index=38&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202019%20and%202018) This subsection analyzes the financial performance for the third fiscal quarter Key Financials for Three Months Ended June 30 (Amounts in thousands, except percentages) | Metric | 2019 | 2018 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenue | $21,906| $16,109| $5,797 | 36% | | Software and hardware revenue | $11,888| $10,458| $1,430 | 14% | | Service and other revenue | $10,018| $5,651 | $4,367 | 77% | | Cost of revenue | $3,168 | $2,678 | $490 | 18% | | Selling and marketing expenses | $6,935 | $5,740 | $1,195 | 21% | | Research and development expenses | $4,663 | $4,161 | $502 | 12% | | General and administrative expenses | $5,074 | $3,239 | $1,835 | 57% | | Acquisition-related costs and expenses | $1,761 | $3,154 | $(1,393) | (44)% | | Restructuring costs | $3,214 | $— | $3,214 | 100% | | Other income (expense), net | $98 | $(1,351)| $1,449 | 107% | | Income tax benefit | $2,712 | $1,430 | $1,282 | 90% | - **Total revenue increased 36% YoY**, driven by a **14%** increase in software and hardware and a **77%** increase in service and other revenue[179](index=179&type=chunk) - Cost of revenue increased **18%** but decreased as a percentage of revenue from **17% to 14%**[180](index=180&type=chunk) - Selling and marketing expenses rose **21%** due to increased headcount and product promotion[181](index=181&type=chunk) - General and administrative expenses increased **57%** due to higher personnel, A2iA-related expenses, and legal costs[182](index=182&type=chunk) - Acquisition-related costs decreased **44%** due to lower executive separation and integration costs[183](index=183&type=chunk)[184](index=184&type=chunk) - **Restructuring costs of $3.2 million** were incurred in Q3 2019 related to the A2iA Paris operations[185](index=185&type=chunk) - Other income improved significantly due to the absence of a **$1.3 million** foreign currency loss from the prior year[186](index=186&type=chunk) - Income tax benefit increased **90%** due to excess tax benefits from stock options and R&D credits[187](index=187&type=chunk) [Comparison of the Nine Months Ended June 30, 2019 and 2018](index=40&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20June%2030%2C%202019%20and%202018) This subsection analyzes the financial performance for the first nine months of the fiscal year Key Financials for Nine Months Ended June 30 (Amounts in thousands, except percentages) | Metric | 2019 | 2018 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Total revenue | $59,572| $42,522| $17,050 | 40% | | Software and hardware revenue | $32,468| $26,437| $6,031 | 23% | | Service and other revenue | $27,104| $16,085| $11,019 | 69% | | Cost of revenue | $9,037 | $6,012 | $3,025 | 50% | | Selling and marketing expenses | $20,895| $15,863| $5,032 | 32% | | Research and development expenses | $14,441| $10,942| $3,499 | 32% | | General and administrative expenses | $15,743| $10,529| $5,214 | 50% | | Acquisition-related costs and expenses | $5,361 | $5,616 | $(255) | (5)% | | Restructuring costs | $3,214 | $— | $3,214 | 100% | | Other income, net | $252 | $(957) | $1,209 | 126% | | Income tax benefit (provision) | $4,861 | $(2,283)| $7,144 | 313% | - **Total revenue increased 40% YoY**, driven by **23%** growth in software and hardware and **69%** growth in service and other revenue[189](index=189&type=chunk) - Cost of revenue increased **50%** due to higher transaction volume and A2iA-related costs[190](index=190&type=chunk) - Selling and marketing expenses rose **32%** due to the A2iA acquisition and increased headcount[191](index=191&type=chunk) - Research and development expenses increased **32%** due to the A2iA acquisition and increased R&D personnel[192](index=192&type=chunk) - General and administrative expenses increased **50%** due to A2iA acquisition expenses, higher personnel costs, and litigation costs[193](index=193&type=chunk) - Acquisition-related costs decreased **5%** due to lower integration costs and changes in contingent consideration fair value[194](index=194&type=chunk) - **Restructuring costs of $3.2 million** were incurred in YTD Q3 2019[195](index=195&type=chunk) - Other income improved significantly due to the absence of a **$1.3 million** foreign currency loss from the prior year[196](index=196&type=chunk) - Income tax shifted from a **$2.3 million provision** to a **$4.9 million benefit**, primarily due to net loss and stock option tax benefits[197](index=197&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, cash flows, and working capital - Cash and investments increased by **$10.5 million (60%)** to **$28.0 million** at June 30, 2019[198](index=198&type=chunk) - Net cash provided by operating activities was **$7.9 million** for the nine months ended June 30, 2019[199](index=199&type=chunk) - Net cash used in investing activities was **$4.3 million**, mainly for net purchases of investments and capital expenditures[201](index=201&type=chunk) - Net cash provided by financing activities was **$3.6 million**, primarily from equity plan proceeds[203](index=203&type=chunk) - Working capital increased to **$25.5 million** at June 30, 2019, from $17.2 million at September 30, 2018[211](index=211&type=chunk) - The company believes its current cash and operating cash flows are adequate for working capital needs for the next twelve months[211](index=211&type=chunk) [Off Balance Sheet Arrangements](index=44&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section discloses any off-balance sheet arrangements - The company had no off-balance sheet arrangements as of June 30, 2019[212](index=212&type=chunk) [Changes in Critical Accounting Policies](index=44&type=section&id=Changes%20in%20Critical%20Accounting%20Policies) This section highlights significant changes to accounting policies - The company adopted ASC 606 (Revenue from Contracts with Customers) effective October 1, 2018, a significant change to its revenue recognition policy[214](index=214&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=44&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section discusses the company's exposure to market risks, specifically interest rate and foreign currency risk [Interest Rates](index=44&type=section&id=Interest%20Rates) This subsection describes the company's exposure to interest rate fluctuations - The investment portfolio, totaling **$11.9 million** in marketable securities, has maturities between one and 12 months[215](index=215&type=chunk) - A hypothetical **100 basis point** change in market interest rates would not materially impact the fair value of the investment portfolio[216](index=216&type=chunk) [Foreign Currency Risk](index=44&type=section&id=Foreign%20Currency%20Risk) This subsection describes the company's exposure to foreign currency exchange rate fluctuations - Operations in France, the Netherlands, and Spain expose the company to fluctuations between the U.S. dollar, Euro, and British pound sterling[217](index=217&type=chunk) - Translation adjustments are reported in accumulated other comprehensive loss[38](index=38&type=chunk)[217](index=217&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=45&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the company's disclosure controls, procedures, and changes in internal control over financial reporting [Disclosure Controls and Procedures](index=45&type=section&id=Disclosure%20Controls%20and%20Procedures) This subsection confirms the effectiveness of the company's disclosure controls - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[219](index=219&type=chunk) [Changes in Internal Control over Financial Reporting](index=45&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection discusses any changes to internal controls - The company is implementing a new ERP system but does not expect it to adversely affect internal control over financial reporting[220](index=220&type=chunk) [Scope of Management's Report on Internal Control over Financial Reporting](index=45&type=section&id=Scope%20of%20Management's%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) This subsection clarifies the scope of the internal control report regarding recent acquisitions - During the third fiscal quarter of 2019, the company completed the implementation of internal control over financial reporting for A2iA[221](index=221&type=chunk) PART II. OTHER INFORMATION This part includes information on legal proceedings, risk factors, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=46&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 9 for details on legal proceedings, indicating no material developments - No material developments in historical legal proceedings have occurred since September 30, 2018[224](index=224&type=chunk) [ITEM 1A. RISK FACTORS](index=46&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines various risks that could materially and adversely affect the company's business and financial condition [Risks Associated With Our Business and Operations](index=46&type=section&id=Risks%20Associated%20With%20Our%20Business%20and%20Operations) This subsection details risks related to the company's business model, products, competition, and operational execution - **Substantial revenue derived from a few technologies**: Dependence on mobile imaging technology could adversely affect financial results if market acceptance fails - **Decline in check usage and slowing mobile banking growth**: The shift to check alternatives could negatively impact business - **Intellectual property infringement claims**: Costly litigation could arise, potentially requiring licenses, product redesigns, or discontinuation of sales - **Inadequate intellectual property protection**: Reliance on patents and trade secrets may not sufficiently protect technologies - **Intense competition**: Facing competitors with greater resources could lead to price reductions or loss of market share - **Need for continuous R&D**: Failure to timely develop enhancements and new technologies could hinder competitiveness - **Product defects or malfunctions**: Errors in complex software could harm reputation, sales, and profitability - **Forecasting difficulties**: Historical order flow patterns make forecasting challenging, potentially leading to adverse operating results - **New business/product risks**: Entry into new lines of business or offering new products may expose the company to new risks - **Adverse economic conditions**: Economic downturns could reduce spending on IT solutions and impact revenue - **Need for additional capital**: Insufficient capital resources for long-term growth may necessitate raising funds through dilutive financings - **Integration expenses for acquisitions**: Challenges in integrating ICAR and A2iA could impact financial results and operational efficiency - **Unsuccessful corporate strategy and restructuring**: The restructuring of A2iA's Paris operations may not yield anticipated benefits - **Volatility in operating results**: Quarterly and annual results fluctuate significantly, leading to stock price volatility - **Data security risks**: Products may not provide absolute security, leading to potential breaches, litigation, and reputational harm - **Inability to retain/recruit qualified personnel**: Dependence on key management and technical personnel is a significant risk - **Regulatory compliance**: Changing legislation (e.g, FCPA, GDPR) could increase expenses and affect business practices - **Foreign tax regulations**: Uncertainty and changes in foreign tax regulations could reduce earnings - **Fluctuations in foreign currency exchange and interest rates**: Exposure to currency fluctuations can affect net revenues and income - **Compliance with corporate governance changes**: Evolving laws increase expenses and divert management attention [Risks Related to Investing in Our Common Stock](index=56&type=section&id=Risks%20Related%20to%20Investing%20in%20Our%20Common%20Stock) This subsection details risks associated with owning the company's common stock - **Strategic alternatives exploration**: Past or future exploration of strategic alternatives can create uncertainty and disrupt operations - **Concentration of ownership**: Directors and executive officers beneficially own approximately **8.2%** of common stock, potentially limiting other stockholders' influence - **Future sales by insiders**: Resales of substantial shares by insiders could adversely impact the stock price - **Future common stock sales**: Potential issuance of shares could cause the market price to decline - **Potential proxy contest**: A proxy contest could lead to operational disruption and resource diversion - **Anti-takeover provisions**: Corporate documents and Delaware law could discourage or prevent a change in control - **Indemnification of officers and directors**: Provisions for indemnification may result in significant costs to the company - **Section 382 Rights Agreement**: This agreement deters accumulation of more than **4.9%** of common stock, potentially delaying takeovers - **Stock price volatility**: The common stock price has been volatile, leading to potential investment value decline - **No dividends**: The company does not intend to pay dividends, meaning stockholders will only benefit from stock price appreciation [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=59&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section states that there were no unregistered sales of the company's equity securities during the quarter - No unregistered sales of equity securities occurred during the quarter ended June 30, 2019, that were not previously disclosed[295](index=295&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=59&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section indicates that there were no defaults upon senior securities - There were no defaults upon senior securities[296](index=296&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that there are no mine safety disclosures - There are no mine safety disclosures[297](index=297&type=chunk) [ITEM 5. OTHER INFORMATION](index=59&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section indicates that there is no other information to disclose - There is no other information to disclose[298](index=298&type=chunk) [ITEM 6. EXHIBITS](index=60&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q - The exhibits include Share Purchase Agreements, Certificate of Incorporation, Bylaws, and certifications from the CEO and CFO[300](index=300&type=chunk) [Signatures](index=61&type=section&id=Signatures) This section contains the signatures of the certifying officers - The report is signed by Scipio Maximus Carnecchia, Chief Executive Officer, and Jeffrey C Davison, Chief Financial Officer, on August 6, 2019[306](index=306&type=chunk)[307](index=307&type=chunk)

Investor presentation : MITK Q3 FY19 © 2019 Mitek Systems Inc. Proprietary and Confidential 1 Safe harbor statement Forward-looking statements contained in this presentation involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to our outlook or e ...